What is the Minimum Wage in California? Current Rates in 2021, History, and Expected Increases

What is the Minimum Wage in California in 2021?

As of 2021, the minimum wage in California is $13.00 per hour for employers with 25 or fewer employees, and $14.00 per hour for employers with 26 or more employees [1]. Although many states have set a different wage rate for tipped employees, California has the same lowest hourly rate requirement for tipped and non-tipped employees. It means that employers cannot use tips to avoid their obligation to pay minimum wage. 

California has one of the highest state minimum wage rates in the USA. The federal minimum wage for non-tipped employees is $7.25, and for tipped employees – $2.13. Although the federal minimum is much lower, the state wage rate overrides the federal rate, so the majority of workers are entitled to receive the one set by California. See how California compares to other states by viewing the 2021 minimum wage by state map.

When is the Next Minimum Wage Increase in California?

The minimum wage in California is set to increase on a yearly basis effective January 1st, 2017. The most recent increase took effect on January 1st, 2021 when the rate increased by $1.00 for both employers who have 25 or fewer workers and 26 or more. Below is the table that shows the scheduled lowest rate increases to be expected in California until 2023. 

Note: The minimum wage increase for employers with 25 or fewer employees will be delayed by one year. In 2023, the rate will become the same for both small and large employers.

What are California’s Local Minimum Wage Ordinances?

Although California has a statewide minimum wage rate, many cities and counties have municipally enacted minimum wage ordinances that can be enforced only if a local rate exceeds that of the state minimum. In that case, local employers must comply with the municipal regulations. 

There are 428 municipalities in California. Do all of them have their local lowest wage rate? No, the majority of the cities in California comply with the statewide minimum wage requirements. Since the local rate cannot be lower than the state one, certain cities and counties may choose to enforce a higher minimum wage to compensate for the significantly higher cost of living. Below is the table that shows some cities/counties that have the local minimum wage rate in 2021 [4].

What is the History of California’s Lowest Hourly Rates?

The history of California’s minimum wage goes back to 1916 with the starting statewide $0.16/hr. Yearly rates and the record of increases starting from 1916 till today can be found on California’s Department of Industrial Relations website. Below is the graph that depicts the history of the minimum wage in California in comparison with the federal minimum by decades starting from 1938 till today (under the Fair Labor Standards Act).

Due to the fact that there are multiple conflicting minimum wage requirements in California – federal, state, and local, employers must comply with the one most beneficial to the employee. So, statewide rates override the federal minimum, and local rates override the state minimum.

Sources

[1] State Minimum Wage Laws 

[2] Schedule for Minimum Wage Rate Increases (2017-2023)

[3] Minimum changes by state for 1968 to 1981 

[4] Changes to Local Minimum Wage Rates throughout California in 2021